Gov. Pritzker releases details of graduated tax plan

Doug Finke GateHouse Media Illinois

Thursday

Mar 7, 2019 at 1:09 PMMar 7, 2019 at 8:09 PM

SPRINGFIELD — A graduated income tax plan would raise taxes on those earning more than $250,000 a year while cutting taxes for the 97 percent of Illinoisans who earn less than that, the Pritzker administration said Thursday.

Gov. JB Pritzker also said he plan will provide more property tax relief for taxpayers and create a new $100-per-child tax credit as part of his package to have people with the state’s highest incomes pay more while providing cuts to a majority of residents.

But finally releasing details of his graduated income tax proposal did nothing to change the minds of Republican lawmakers, business interests and others who are adamantly opposed to a graduated tax.

“We can’t trust Springfield politicians with a blank check,” said Greg Baise, chairman of the dark money group Ideas Illinois, which opposes the tax. “Today’s proposal is just a massive jobs tax on Illinois families and will destroy the Illinois economy and further accelerate people fleeing from the state.”

“They couldn’t be more wrong,” said Pritzker at a Thursday news conference to discuss the plan. “They ignore the fact people and businesses are fleeing our state with our current regressive tax system.”

Although Pritzker touted the fact his plan will give 97 percent of Illinois taxpayers a cut, he said that wasn’t the most important part of the plan.

“The most important thing we are accomplishing is stabilizing the finances of the state,” Pritzker said.

The plan will raise $3.4 billion, Pritzker said. It will provide revenue to “eliminate the budget deficit, balance future budgets and reduce the pension liability.”

Most people see a tax cut — even if it will be small in many cases — because income will be taxed at marginal rates. For example, for someone earning $200,000 a year, the first $10,000 of income would be taxed at a rate of 4.75 percent (currently it is taxed at 4.95 percent). The rate would be 4.90 percent on the next $90,000, and then the person would pay 4.95 percent on the remaining $100,000.

That system applies to incomes that do not exceed $1 million. Residents who earn more than $1 million a year, will pay a single rate, 7.95 percent, on their entire income.

“This tax plan does ask people who are wealthier to pay more, but not unreasonably so,” Pritzker said.

Illinois Chamber of Commerce president Todd Maisch said that will lead to high earners looking for ways to shield income or simply relocate to a lower tax state.

Maisch also said that once the state moves to a graduated income tax there will be nothing stopping lawmakers from changing rates for middle class payers.

“We’ve seen that in other states. It always starts out as a millionaires tax and it always ends up as a tax on the middle class,” he said.

Pritzker’s plan also calls for a $100-per-child tax credit for single filers earning less than $80,000 and joint filers earning under $100,000. For both groups, the credit starts phasing out with higher incomes.

The plan also calls for a 20 percent increase in the money available for a property tax credit for income tax filers. The available money will move from $500 million to $600 million.

Maisch said that in a place like DuPage County, even a modest home will have a substantial property tax bill.

“Do a few dozens of dollars (of relief) make a difference to you? I don’t think so,” he said.

Pritzker said he will negotiate with lawmakers from both parties on details. He said it doesn’t matter if people disagree with his plan, but “they must disagree in good faith with a specific counter proposal. They must say specifically what they support that will address the $3.2 billion budget deficit, pay down $15 billion in debt from unpaid bills and protect working families.”

The governor acknowledged there was universal opposition to the idea from Republicans before the plan was unveiled, but now “the revelation of what this plan might look like will give them an opportunity to reconsider.”

“The House Republican Caucus stands united in opposition to a $3.4 billion tax increase on Illinois families and businesses,” House Republican Leader Jim Durkin said in a statement.

Senate Republicans also said they are opposed to the plan “without guaranteed protections for middle class families.”

Pritzker has said he wants lawmakers to vote this spring to put an amendment on the 2020 general election ballot asking voters if they want to move Illinois from a flat income tax to a graduated tax where higher earners pay more.

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